Over the past few years, the allocation for the Ministry has increased but urban areas continue to suffer due to poor implementation of schemes, and inadequate financial and technical capacity of cities to meet the challenges of urbanisation. The Pradhan Mantri Awas Yojana, metro rail projects, and Smart Cities mission are worth viewing in this regard.

The expenditure of the Ministry for 2022-23 is estimated at ₹76,549 crore (1.94 per cent of the Union Budget). This is an increase of 4 per cent over the revised estimates for 2021-22. Major allocations of the Ministry include PM Awas Yojana -Urban (PMAY-U) (37 per cent of the Ministry’s allocation), metro rail projects (31 per cent), and Smart Cities Mission (9 per cent). The issues here are as follows:

Targets under PMAY-U may not be completed; the scheme may not be catering to its core target group: In 2012, the urban housing shortage was estimated at 1.9 crore houses. PMAY-U seeks to achieve the ‘Housing for All’ target in urban areas by 2022. The Parliamentary Standing Committee on Urban Development (2021), while acknowledging the impact of Covid-19, observed the slow progress of PMAY-U. As of February 2022, 1.14 crore houses have been sanctioned under the scheme, of which, 48 per cent have been completed. The Committee recommended the Ministry to ensure that all targets are met by March 2022.

In 2012, it was estimated that economically weaker sections (EWS) and low-income groups (LIGs) accounted for 96 per cent of the total housing shortage in India. Under PMAY-U, interest subsidy up to ₹2.6 lakh is given to beneficiaries from EWS, LIGs, and middle-income groups for constructing houses. The Standing Committee observed that in several States including Uttar Pradesh, Andhra Pradesh, and Jharkhand, most of the beneficiaries receiving subsidies belong to middle-income groups. This suggests that the scheme implementation may not be catering to its core target group.

Urban transport projects other than the metro may be more viable for Indian cities: Over the past few years, the Ministry has allocated a substantial amount to metro projects. In 2022-23, expenditure on metro projects is estimated to be ₹23,875 crore (2nd highest allocation of the Ministry’s budget). In 2019, the Standing Committee on Urban Development observed that high allocation towards metro projects leads to inadequate funds for other schemes of the Ministry.

The National Transport Policy Development Committee (2014) had noted that Indian cities have traditionally been developed in a way that allows neighbourhoods to provide for residences, workplaces, and social and educational facilities. This results in minimising trip lengths leading to less dependency on motorised transport. Metro is efficient when the average trip distance is greater than 12 km. The average trip length in medium and small Indian cities is less than 5 km, making non-motorised transport the preferred mode of commute.

In 2021, a CAG Report on Delhi Metro observed that ridership (number of passengers) for the Delhi Metro network in 2019-20 was projected to be 53 lakh. However, the actual ridership in 2019-20 (pre-Covid year) was 28 lakh (52 per cent of the projection). The report also noted a consistent increase in the operating cost ratio from 49 per cent in 2011-12 to 81 per cent in 2019-20, indicating the inefficient operational performance of Delhi Metro.

Irregularities in implementing Smart Cities Mission:Smart Cities Mission, launched in 2015, seeks to promote 100 smart cities having core infrastructure (such as water, electricity supply, sanitation, and public transport) through financial support (average ₹100 crore per city per annum) for five years. In 2022-23. the Mission has been allocated ₹6,800 crore (a 3 per cent increase over the revised estimates of 2021-22).

The Standing Committee Urban Development in 2021 had highlighted irregularities in the implementation of the Mission including the frequent dropping of projects after finalising proposals, redoing of the same work, and project costs being higher than the market rate.

As of February 2022, out of the total 5,151 sanctioned projects, only 3,480 projects (67 per cent) have been completed.

ULBs lack technical and financial capacity: The schemes being implemented by the Ministry seek to decentralise the planning process to the city and state level, by giving urban local bodies (ULBs) a greater role in the implementation of programmes. For instance, under the Smart Cities Mission, cities have to generate revenue through various sources including market borrowings.

However, experts have noted that ULBs in India are among the weakest in the world both in terms of capacity to raise resources and financial autonomy. Municipal revenue in India accounts for only 1 per cent of the GDP (2017-18). ULB’s own revenue rose from 0.49 per cent of GDP in 2010-11 to 0.53 per cent in 2012-13 but has declined thereafter.

The Finance Ministry (2017) observed that an inability to service funding requirements impacts project implementation. Further, in 2011 a High Powered Expert Committee observed that ULBs have suffered due to the presence of untrained and unskilled manpower, and shortage of qualified technical staff.

It had recommended improving the capacity of ULBs by providing technical assistance to States and ULBs in planning, financing, monitoring, and operation of programmes.

Note that in her 2022-23 Budget speech, the Finance Minister acknowledged the need for a paradigm change in urban planning. She announced that a high-level committee of urban planners, urban economists, and institutions will be formed to make recommendations on urban sector policies, capacity building, planning, implementation, and governance.

The writer is an Associate Analyst at PRS Legislative Research, New Delhi